Lynas a step closer to US processing plant with Pentagon deal
Lynas has reached a deal with the Pentagon for a market and strategy study for a $40m rare earths processing plant in Texas.
Australia’s only rare earths company, Lynas, has reached a deal with the Pentagon for a market and strategy study for a $40m rare earths processing plant in Texas.
The deal comes as Australian and US ministers are set to discuss co-operation on rare earths in their annual AUSMIN talks in Washington this week between the Defence and Foreign Affairs ministers of both countries.
Lynas said it had signed a contract with the US Department of Defence to fund the study as well as detailed planning and design work for the construction of a facility which would separate heavy rare earths near San Antonio, Texas. The project is in conjunction with the Texas-based company Blue Line Corporation.
Details of the deal prompted Lynas shares to surge 12 per cent to $2.43.
Lynas mines its rare earths in Mt Weld in Western Australia, and processes its light rare earths in its Malaysia plant.
At the moment some 5 per cent of its output by volume, which is heavy rare earths, is sent to China for processing.
Lynas chief executive Amanda Lacaze said that if the Texas plant went ahead, it would mean all of its processing of heavy rare earths could be done in the US.
She said the work on the next stage of the feasibility and engineering study for the plant, was expected to be finished by the end of the financial year.
Ms Lacaze said it was a coincidence that the deal with the Pentagon was announced at the same time of the AUSMIN talks.
She said Lynas had been looking at the feasibility of having a separation facility for its heavy rare earths for some time.
The proposed plant was part of the Lynas 2025 growth plan announced in May last year.
Lynas is not revealing how much the US Department of Defence is contributing to the study.
Analysts estimate the new plant will cost more than $40m.
Ms Lacaze said she was “very pleased” to have signed a contract with the Pentagon for work on the first phase of the project.
She said heavy rare earths were essential for high performance magnets used in electric motors.
“Lynas has the feedstock, intellectual property and track record to deliver a heavy rare earths facility in a timely and low risk manner,” she said. “We look forward to working with the Department of Defence to progress this project.”
The deal comes at time of increasing tension between the US and China with threats by China to cut off supplies of rare earths to US companies such as defence company Lockheed Martin. Lynas is the world’s biggest producer of rare earths outside China.
The US Defence Department funding for the initial study is seen as a potential precursor for more support from the department for the project in the face of increasing tensions with China.
Ms Lacaze said it was a logical step for Lynas to have its own plant to separate heavy rare earths. “It makes good business sense for us.”
She said Lynas had a “high degree of confidence” in the market demand for heavy rare earths.
While there was agreed funding for the first phase of the project, there was “no guarantee” it would proceed to construction.
But she said it was an “excellent opportunity” for Lynas to continue its growth.
